Asian stocks rise, tracking Friday’s gains in the US, with optimism over corporate earnings helping to drive an advance in Japan. The dollar climbed as traders start to position for a policy decision by the Federal Reserve.
(Bloomberg) — Asian stocks rise, tracking Friday’s gains in the US, with optimism over corporate earnings helping to drive an advance in Japan. The dollar climbed as traders start to position for a policy decision by the Federal Reserve.
An index of Asian equities on Monday climbed for the fourth time in five days. Apple Inc.’s earnings report on Friday had buoyed technology shares, helping the S&P 500 and the Nasdaq 100 notch their longest weekly rising streak since August. Tech equities in Hong Kong jumped, with gains seen from Japan to Australia. US futures pared losses.
The yen fell against all its Group-of-10 peers, with economists expecting the Fed to raise rates by another 75-basis-points this week, widening the policy divergence with the Bank of Japan. A core gauge of US inflation accelerated in September, bolstering the case for more tightening.
Meanwhile, wheat soared after Russia exited a key agreement to allow Ukrainian crop shipments.
The yield on the 10-year Treasuries hovered at around 4% after surging by nine basis points on Friday. Yields climbed in Australia ahead of a policy decision by the country’s central bank on Tuesday.
Read: Treasuries Swept Up in Global Rout as Inflation Fears Resurface
“The question is does the narrative of front loading come to an end? I think that’s where the market’s waiting for this pivot,” Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg Radio. “I just think if the Fed can signal that they can go 75 and then they can slow down the pace of hikes, I think the market will be comforted by that.”
Economists surveyed by Bloomberg expect Fed officials will maintain their hawkish stance, laying the groundwork for interest rates reaching around 5% by March 2023, potentially leading to a US and global recession.
Brazil’s local assets are set to weaken on Monday after Luiz Inacio Lula da Silva won the presidential election. The extent of the market drop will depend on whether President Jair Bolsonaro will concede as a contested election would likely trigger larger losses.
Oil headed for the first monthly advance since May ahead of output cuts by the OPEC+ alliance, which may tighten the market further.
Key events this week:
- Companies reporting earnings this week include: Moderna, Pfizer, Airbnb, AIG, Maersk, Barrick Gold, BMW, Bharti Airtel, BP, ConocoPhillips, Estee Lauder, Ferrari, ING, Intercontinental Exchange, KKR, Mitsui, Newmont, Petrobras, Qualcomm, Restaurant Brands, Saudi Arabian Oil, SoftBank, Sony, Starbucks, Toyota, Uber and Yum! Brands.
- Eurozone CPI and GDP, Monday
- Reserve Bank of Australia policy decision, Tuesday
- US construction spending, ISM manufacturing index, Tuesday
- EIA crude oil inventory report, Wednesday
- Federal Reserve rate decision, Wednesday
- US MBA mortgage applications, ADP employment, Wednesday
- Bank of England rate decision, Thursday
- US factory orders, durable goods, trade, initial jobless claims, ISM services index, Thursday
- ECB President Christine Lagarde speaks, Thursday
- US nonfarm payrolls, unemployment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures fell 0.2% as of 12:05 p.m. Tokyo time. The S&P 500 rose 2.5% Friday
- Nasdaq 100 futures fell 0.3%. The Nasdaq 100 rose 3.2%
- Japan’s Topix index rose 1.3%
- South Korea’s Kospi index rose 0.9%
- Hong Kong’s Hang Seng Index added 0.5%
- China’s Shanghai Composite Index dropped 0.1%
- Australia’s S&P/ASX 200 Index rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro fell 0.1% to $0.9955
- The Japanese yen fell 0.3% to 148.06 per dollar
- The offshore yuan fell 0.2% to 7.2797 per dollar
Cryptocurrencies
- Bitcoin fell 1% to $20,478.11
- Ether fell 1.3% to $1,574.93
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.04%
- Yields on Australia’s 10-year bonds rose two basis point to 3.76%
Commodities
- West Texas Intermediate crude fell 0.5% to $87.49 a barrel
- Spot gold fell 0.2% to $1,641.74 an ounce
–With assistance from Garfield Reynolds.
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